Strategic sourcing is a procurement process that continuously improves and re-examines the buying activities of an organization. Strategic sourcing is the backbone of any organization functions. Strategic sourcing is important to a company because it determines its operations and overall profitability (Maromonte, 2008).
Strategic sourcing is one of the major decisions that the organizations have to take with respect to their operational strategy, whether it’s an international or domestic business. Every company should make strategic sourcing decisions, ensuring that they are unique and beneficial to any organization which base its operations on these decisions. Strategic sourcing involves selecting right suppliers as well as ensuring that the production process is well planned far in advance (Maromonte, 2008). Organizations which carry out business outside the country, initially have different ways to choose their suppliers. Certain factors need to be put in place to distinguish strategic ways and working environment of a company. these factors are important because they determine the finest proceeds of an organization when working with contractors. In most cases when a corporation is doing international business, it will use strategic sourcing that is unswerving with the global strategy (Maromonte, 2008).
Sourcing strategies use global resources to ease and make sure that the procurement strategy is efficient. Global sourcing involves getting raw materials from outside the country and also sourcing for expert’s personnel and expert services to ensure that the production process of a company is profitable. Global sourcing is important because it allows companies to source what they lack in the mother country. The resultant product benefits from procurement strategies. For example, Kenya is always looking for medical experts from India. Global sourcing comes at an advantage as the variance in foreign exchange rates and reduced cost of living may favor a country that is using the sourcing process. The benefits of the global supply are vital in making sure that a company minimizes its overall cost of production and procurement strategies that leads to increase in the profitability in the long run (Maromonte, 2008).
In strategic sourcing, a company always aims at high quality. In global sourcing, a company looks for sophisticated machines and skilled labor, if the local workforce is not able to deliver well. The sourcing always improves and ensures production efficiency (Maromonte, 2008). Companies always follow the expert’s advice from other countries when they lack experience. Moreover, strategic sourcing gives best practices of sharing, creating real partnerships between companies and suppliers, standardizing prices and developing operational efficiency (Maromonte, 2008).
Management skills necessary for global sourcing are high to maintain in the context of quality attached to the strategic sourcing. In some cases, national governments regulate supply of raw materials or services from outside the country. External factors like culture and mentality also influence foreign supply policy, given its cost advantage.
Strategic sourcing always tries to improve the price value of a service. The process result in reduced costs and improved quality of the services rendered. Strategic sourcing also carefully monitors the relationships of the suppliers in the whole organization, and also leverages the entire company expenditures (Maromonte, 2008).
Strategic sourcing always offers solutions to companies on how to make sure that they adopt cost minimization formulas that are deemed essential in the realization of a business’s goals and objectives. Questions to be raised is: do organizations adhere to strategic sourcing processes?
Reference
Maromonte, K. (2008). Corporate strategic business sourcing. Westport, Conn.: Quorum Books.